Council OKs contract with Enstar

With one member excused, three participating telephonically, two present in the council chambers, and with Homer Mayor Beth Wythe stepping away from the gavel due to a conflict of interest based on her employment at Homer Electric Association, the Homer City Council approved a not-to-exceed $12.1 million contract with Enstar Natural Gas at its regular meeting on Monday.

James Dolma was the council member excused from the meeting. Beau Burgess, Barbara Howard and Bryan Zak attended telephonically. Present were David Lewis and Francie Roberts, who, as mayor pro tempore, picked up the gavel for Wythe.

"Now that it's approved, Walt (Wrede) will be moving forward with working on the distribution system," Katie Koester, the city's economic development coordinator, said of the next step to be addressed by Homer's city manager.

With the contract finalized, the focus is now on Enstar.

"Walt Wrede and the city council have done a really good job moving this forward," John Sims, manager of Enstar's corporate communications and customer service, told the Homer News. "Now it's Enstar's turn to get to work."

Enstar will have a pre-bid meeting at the Best Western Bidarka Inn at 9:30 a.m. Friday with companies interested in bidding on construction of the distribution system throughout the Homer Natural Gas Distribution System Special Assessment District created by the council in February. The district includes almost all the properties within the city limits.

The contract, or "Contribution in Aid of Construction Agreement" as it is called in Resolution 12-017(S) approved by the council Monday, directs Enstar to construct a natural gas distribution system of approximately 74.24 miles of 2-inch high-density pipe to service the lots and tracks within the assessment district.

Enstar may choose to construct the system to accommodate a future increased customer load, but all costs in excess of the agreed upon amount will be borne by Enstar. The contract amount of $12.1 million is an estimate calculated in accordance with Enstar's tariff, and was used to calculate property assessments within the special assessment district. The city has assessed each property $3,283.

Construction will be done in two phases. The first phase is planned for 2013 and the second phase for the following year. Should the work not be completed until 2015, the not-to-exceed amount remains in effect.

The contract recognizes the total project costs may be less than $12.1 million, and Enstar will invoice the city for its actual costs of construction on a time-and-materials basis.

The schedule for the city's payments to Enstar includes:

 March 25: $2 million to facilitate pre-construction activities;

 June 3: $3 million once Enstar has notified the city a construction contract has been signed with a third-party contractor;

 Aug. 5: $2 million;

 Beginning in 2014: Enstar will invoice the city each month for actual costs for labor, materials and contractor work until the project is complete or the not-to-exceed amount of $12.1 million has been paid.

During the city manager's report, Wrede presented two legal opinions regarding the method of assessing condominiums within the Homer Natural Gas Distribution System Special Assessment District. (See related story, page XX.)

Monday's 45-minute council meeting was one of the shortest council meetings on record. Most items were addressed and approved on the consent agenda, including:

 Resolution 13-027, supporting House Bill 4, legislative efforts to construct a natural gas pipeline form the North Slope to Southcentral Alaska.

Ordinance 13-06 was removed from the consent agenda so it could be discussed separately. It seeks to amend city code pertaining to permanent fund contributions by providing that 5 percent of a sub-fund be available for grants to the Homer Foundation. The ordinance was returned to the city's Permanent Fund Committee for clarification. It will be placed on the council's April 22 agenda.

A work session is scheduled for the city council at 4 p.m. March 26, with a committee of the whole meeting at 5 p.m. and a regular meeting at 6 p.m.